Inequality rising since 2000s, top 1 per cent in India holds 40 per cent wealth: study
Inequality rising since 2000s, top one per cent in India holds 40 per cent wealth: study Frontline
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Inequality in India: The Rise of the Billionaire Raj
Inequality in India has witnessed a significant increase since the early 2000s, with the income and wealth share of the top one per cent of the population reaching 22.6 per cent and 40.1 per cent respectively in 2022-23, according to a working paper titled “Income and Wealth Inequality in India, 1922-2023: The Rise of the Billionaire Raj”. This rise in top-end inequality, particularly in terms of wealth concentration, has been pronounced between 2014-15 and 2022-23.
Background
In 2014, Prime Minister Narendra Modi came into power with a mandate for development and economic reforms. However, critics argue that his tenure has been marked by a widening gap between the rich and the rural poor. Despite India’s economy growing at 8.4 per cent, its fastest in one-and-a-half years, in the final three months of 2023, there has been a growing concern about the government’s proximity to billionaires. The main opposition party, Congress, has raised this issue in rallies ahead of the general election starting from April 19.
The Findings
The working paper, authored by Thomas Piketty, Lucas Chancel, and Nitin Kumar Bharti, highlights that India’s top one per cent income and wealth shares (22.6 per cent and 40.1 per cent) are at their highest historical levels. India’s top one per cent income share is among the highest in the world, surpassing even countries like South Africa, Brazil, and the US.
The paper suggests that the Indian income tax system may be regressive when viewed from the perspective of net wealth. Factors such as lack of education have trapped some individuals in low-paid jobs, leading to the stagnation of income growth for the bottom 50 per cent and middle 40 per cent of Indians.
The authors propose a restructuring of the tax code to consider both income and wealth, along with broad-based public investments in health, education, and nutrition. These measures are essential to ensure that the benefits of globalization are accessible to the average Indian, rather than just the elites. The paper also suggests implementing a “super tax” of two per cent on the net wealth of the 167 wealthiest families in 2022-23, which would generate 0.5 per cent of national income in revenues and create fiscal space for such investments.
Impact of Reforms
The Chief Economic Adviser of the Indian government stated in December 2023 that subsidised grain distribution, spending on education and health, and direct cash transfers through a rural jobs scheme have contributed to a more equal distribution of income.
Historical Perspective
The paper highlights that India’s top 1 per cent income share increased significantly from 13 per cent in 1922 to over 20 per cent in the inter-war period. After a sharp decline during the 1940s, reaching 13 per cent by the time India gained Independence, the top 1 per cent income shares consistently fell over the next two decades, reaching 6.1 per cent by 1982. This decline was attributed to the socialist policy agenda pursued by the Indian government until the 1980s.
Since the early 1980s, when India began implementing economic reforms leading up to liberalization in 1991, the decline in the top 1 per cent income shares halted. From the early 1990s, the top 1 per cent income shares have consistently increased over the next 30 years, reaching an all-time high of 22.6 per cent in 2022.
Impact of Globalization
Since India opened its markets to foreign investment in 1992, the number of billionaires in the country has surged. According to Forbes billionaire rankings, the number of Indians with a net wealth exceeding $1 billion rose from one in 1991 to 162 in 2022. The two richest men in Asia, Mukesh Ambani of Reliance Industries and Gautam Adani of Adani Group, are Indian. The top 10,000 wealthiest individuals among the 92 million Indian adults own an average of Rs.22.6 billion in wealth, which is 16,763 times the country’s average. Meanwhile, the top 1 per cent possesses an average of Rs.54 million in wealth.
Conclusion
The working paper emphasizes that India’s income inequality has reached alarming levels, surpassing even the disparities witnessed during the British Raj. To address this issue, it recommends a restructuring of the tax system, along with investments in health, education, and nutrition. These measures are crucial not only for combating inequality but also for creating a more sustainable and inclusive society.
SDGs, Targets, and Indicators Analysis
1. Which SDGs are addressed or connected to the issues highlighted in the article?
- SDG 1: No Poverty
- SDG 10: Reduced Inequalities
The article discusses the rising inequality in India, specifically focusing on the income and wealth concentration among the top one percent of the population. This directly relates to SDG 10, which aims to reduce inequalities within and among countries. Additionally, the issue of inequality is closely linked to SDG 1, which aims to eradicate poverty in all its forms and dimensions.
2. What specific targets under those SDGs can be identified based on the article’s content?
- Target 10.1: By 2030, progressively achieve and sustain income growth of the bottom 40 percent of the population at a rate higher than the national average.
- Target 10.4: Adopt policies, especially fiscal, wage, and social protection policies, and progressively achieve greater equality.
The article highlights the widening gap between the rich and the rural poor in India, indicating a need to address income growth for the bottom 40 percent of the population. This aligns with Target 10.1 of SDG 10. Additionally, the article suggests the implementation of fiscal policies, such as a “super tax” on the net wealth of the wealthiest families, to reduce inequality, which corresponds to Target 10.4.
3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?
- Income and wealth share of the top one percent of the population
- Income growth rate of the bottom 40 percent of the population
- Implementation of fiscal policies, such as a “super tax” on the net wealth of the wealthiest families
The article provides specific indicators that can be used to measure progress towards the identified targets. The income and wealth share of the top one percent of the population indicates the level of inequality in society. Additionally, monitoring the income growth rate of the bottom 40 percent of the population can assess whether their income is increasing at a higher rate than the national average. The implementation of fiscal policies, such as a “super tax,” can be used as an indicator of progress in achieving greater equality.
Table: SDGs, Targets, and Indicators
| SDGs | Targets | Indicators |
|---|---|---|
| SDG 1: No Poverty | Target 10.1: By 2030, progressively achieve and sustain income growth of the bottom 40 percent of the population at a rate higher than the national average. | – Income growth rate of the bottom 40 percent of the population |
| SDG 10: Reduced Inequalities | Target 10.1: By 2030, progressively achieve and sustain income growth of the bottom 40 percent of the population at a rate higher than the national average. | – Income and wealth share of the top one percent of the population |
| Target 10.4: Adopt policies, especially fiscal, wage, and social protection policies, and progressively achieve greater equality. | – Implementation of fiscal policies, such as a “super tax” on the net wealth of the wealthiest families |
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Source: frontline.thehindu.com
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